Beginning with the Unemployment Insurance (UI) Weekly Claims News Release on April 6, 2023, the methodology used to seasonally adjust the national initial claims and continued claims reflects a change in the estimation of the models. This resulted in a significant upward adjustment to weekly initial and continuing unemployment claims for February and March 2023. Previous data showed that initial claims remained very low at just below 200,000/week during those two months, but the updated seasonally adjusted data show an average level of 218,000/week for February and 242,000/week for March.
As a result, the number of individuals receiving unemployment insurance (continuing claims) in February and March was revised up to an average of 1.734 million (from 1.713 million) and 1.804 million (from 1.680 million), respectively. This rise is more consistent with the large number of layoffs announced by high-profile tech and retail companies since the beginning of this year. This revised data is clear evidence that the labor market has become “less tight” thus far this year.
That upward trend continued into mid-April. Initial claims for unemployment insurance (UI) rose by 5,000 to 245,000 in the week ending April 15 from 240,000 (unrevised) in the week ending April 8. The four-week moving average of claims, which smooths out some of the weekly volatility, was unchanged at 240,000 in the week ending April 15 from the previous week. Continuing claims for unemployment insurance jumped by 61,000 to 1.865 million in the week ending April 8 from 1.804 million in the week ending April 8. The four-week moving average of continuing claims rose by 15,000 to 1.828 million in the week ending April 8. The insured unemployment edged up to 1.3% in the week ending April 8 from 1.2% in the previous week.
Layoff announcements across industries – but especially concentrated in tech – typically take time to go into effect after initial news breaks. One influence on initial UI claims in the coming months, however, could be saturation of businesses that have been quickly absorbing laid-off workers.
With talk of deteriorating economic conditions and in the wake of the recent bank failures, businesses may turn more cautious in their hiring practices. Thus, any new layoffs in the months to come would more directly translate into a further rise in UI claims signally a slowdown in payroll job growth and less upward pressure on worker compensation. This will be welcome news to the FOMC and could lead them to pause rate hikes after one last 25 bps rise to a 5.00-5.25% target range at their May 3 meeting.
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